Friday, April 28, 2017

"Economists React to First Quarter GDP Report: ‘Stronger Than It Appears’"

Not that much stronger.

From the WSJ's Real Time Economics blog:

The U.S. economy grew at the slowest pace in three years during the first quarter, rising at a 0.7% rate, down from the prior quarter’s 2.1% rate. Here are early reactions from economists and analysts:

“Perhaps most encouraging, business investment in equipment, which
had languished for two years, posted a 9.1% annualized advance (I had
looked for a 6% rise). If the government can pull off corporate tax
reform, I look for a torrent of investment projects to be unleashed. Until then, gains will be limited.” —Stephen Stanley, Amherst Pierpont Securities
“Economy stronger than it appears in [first-quarter] report, already showing signs of accelerating again. Tailwind for wages encouraging.” —Diane Swonk, DS Economics

“While consumers may have stood still in the first quarter,
sluggishness in consumer spending did not translate to the housing
market…Housing is on track to cement its place as the bright spot on the economy.” —Nela Richardson, Redfin

“Growth of less than 1% means the wheels are up but the economy’s engines cannot gain any altitude.
We will see how long the mile-high confidence readings of consumers and
businesses hold up. The best temperature gauge of their relative
optimism is always the stock market we always thought and Dow
industrials closed up 6.2% year-to-date last night before the GDP data.”
—Chris Rupkey, MUFG Union Bank
“Here’s why I’m not freaking out about the low preliminary estimate to U.S. GDP (spoiler: it’ll get revised)” —Tara Sinclair, Indeed

“The trivial 0.7% annualized gain in first-quarter GDP, below the consensus forecast at 1.2%, won’t necessarily stop the Fed from hiking interest rates again in June.
In recent years there is a well-established pattern of GDP growth
disappointing in the first quarter and then rallying over the remaining
three quarters.” —Paul Ashworth, Capital Economics